There are programs like Nehamiah, Ameridream, you can even use them with FHA financing.
http://www.fha.com/program_ameridream.cfm
I am personally doing a deal right now with Nehamiah with FHA, let me go over a little bit about how it works.
The seller participates into this program and pays a fee at closing to this company, the company charges a processing fee, on my transaction it’s $295. Then the buyer is able to get a similar amount from Nehamiah for the time of closing. The seller doesn’t owe it unless the deal goes through. This idea has been tested with the courts and passed.
The form I have right now with Nehamiah is a 1 page form that the seller signs.
The website is www.getdownpayment.com 1-877-634-3842
There is a contribution amount of 1-6% on one line. Another line has the processing fee. Another line has the total amount due to Nehamiah Corporation of America.
They claim to be the largest privately funded down payment assistance program. They describe it as gift funds for the buyer. The seller signs, and prints there name and fills out the address.
It does read as the following:
Note: You are only committed to pay the above contribution and fee if a home buyer utilizes the nehamiah program to purchase your home.
What I like about this program is right now with 550-600 credit scores we have had people getting loans done up to 100% financing. How do we do this? Well with the Nehamiah program that contributes 3% and the other 3% in closing costs paid by the seller rolled into the loan, that helps to make it almost no money out of pocket for the buyer. Buyer may still need to pay for an appraisal, maybe an inspection, but it’s really easy with this program and the credit scores and other qualifying standards are pretty fair.
If you want any help at any point looking at properties and aren’t working with an agent, let me know ron@minnesotainvestors.com
When I run my excel spreadsheet with the costs of owning a home or rental property, here are the incomes, expenses, and tax considerations I consider when deciding profits or losses.
Market Value @ the time of purchase
Net Price from seller
+Closing Costs on top
+Buy + List agent commission on top
Interest Rate
Down Payment %
Years(term) of Loan
Starting Loan amount
Annual Maintenance
Assoc Fee/lawn-snow-ins, etc.
Annual Marketing for rent
Annual Unpaid Waterbill
Annual Unpaid Rents
Annual Carpet replacement
Annual Re-Paint expense
Annual Vacancy Lost Rent $
Total Expenses Annually
Avg. Months Vacant each year
Monthly Rent
SELLING COSTS
Market Value if sold retail
6% list fee
1% seller closing costs
PITI holding costs until close
Pay to get to show mint condition for resale
Months vacant while listed on MLS
Average Annual Appreciation
Years Held
Total Expenses Holding Costs
Total Expenses Selling Costs
Total Holding + Selling costs
Total Rents collected
Total Commission Reserves
Net to Seller
Months Held
Loan Payoff at sale
AFTER THE CLOSING
Proceeds at close
Net$ Pre-Tax(less down payment returned)
15% Capital Gains if >1+ year
Net $ After Capital Gains
Other things to consider
Annual Rent Increases
Depreciation Write-Off
Depreciation Recapture
Interest Write-Offs
Rental Income Tax Bracket
Interest Only Loan
Vacancy factored in while rehab
rental deposit retained
option deposit retained
From mortgage lenders for refinancing homes to the purchase transaction, please see the process below.
As a real estate agent, I have a steps to success for a typical transaction I do. Here they are, basically in this order, I could add more steps in between, but this will give you the idea of Property Transactions up until Closing
Credit Score
Down Payment Source?
Reserves?
2 years personal tax returns
2 years business tax returns
Business P&L
1 Full month of Paystubs
2 years of W-2′s
2 Months checking & Savings
IRA/401k/mutual/Stocks Quarterly
Copy of Divorce Decree
Bankruptcy Papers
Home Owners Insurance
Mortgage Statements ALL loans
Lease Agreements ALL rentals
Property Tax Statement All rentals
Copy of Drivers license or ID
Pre-Approval or D/U(dekstop underwriting)
Handling Process:
Date verbally want the house?
Date PA written?
Date PA faxed to Buyer?
Date PA signed by Buyer?
Date PA faxed to List Agent
Date PA signed/Seller?
Date showing contract, or facilitator signed?
Date PA back signed for Buyer’s Agent
Date PA faxed to Loan Officer?
Date Processor starts on file
Date loan package was submitted?
Date Are Conditions received from u/w?
Date Title Commitment is ordered?
Date builder Orders c/o if needed
Date Appraisal will be ordered
Date PA faxed from L/O to appraiser
Date Appraiser can view property
Date Appraiser gives L/O appraisal
Date Appraisal sent to u/w
Date in Appraisal Review
Date Sworn/Payoffs in from seller?
Date Copy of c/o to title person
Date All Invoices Sent to closer?
Date All Conditions are in to u/w?
Date In U/W for review
Date CTC(Clear to Close) Given?
Date In closing department
TIME Closing Package received?
TIME for HUD review?
TIME of Buyer’s signatures all paperwork?
TIME Down Payment given to title company same day?
TIME Seller signatures same day?
TIME Final HUD is approved by lender
TIME Wire comes In, or is and funds released?
TIME Loan Funded, and Disbursement of all monies, wires and checks?
If a seller was going to have a note buyer buy their note, these are the questions that a notebuyer would ask before deciding, there may be more questions, but this will be most of them. For those of you newer to notes, imagine selling a house worth $200,000 on a contract for deed for $200,000 and then a buyer is paying 8% interest with 10 down payment. Then the seller who is still the owner on the contract for deed decides they no longer want to own the house, they can sell that contract for deed as an “income stream” to a new buyer who will pay cash and cash you out. They would discount this amount, so they would pay you probably 85-90% of the remaining loan. So let’s say $200,000 – $20,000(10% down payment) that’s a $180,000 balance, the note buyer would pay 90% of that, which is $162,000 cash , to cash you out. Please keep in mind the higher the down payment, higher the buyer’s credit score, shorter the balloon, and higher the interest rate, the lower the “hit” discount the seller will take.
Preliminary Data Sheet
Note For Sale
Payor Data
Name:
Address:
Credit History:
Note Information
Date of the note was created:
Original Principal Amount:
Current Balance:
Interest Rate:
Amortization Period:
Balloon?
Due date of balloon:
Amount of balloon:
Payment History:
Payment (interest only):
Escrow (Taxes & Insurance):
Total Payment:
1st Payment Due Date:
Last Payment Made:
Next Payment Made:
# of Payments Made:
# of Payments Remaining:
Collateral Data
Security Position (1st, 2nd,…):
Type of Security:
Type of Property:
Is it owner occupied:
Property Address:
When did the property last sell?
Sales Price:
Cash Down Payment:
Current Value of Property:
Any additional liens on the property:
Current balance of liens:
Other relevant information:
If you have 10% to put down on a contract for deed, or want to cash out and sell the note on your contract for deed please email me at ron@Minnesotainvestors.com
I suppose note buying could even buy structured settlement I could do a future post on that.
Selling House Questions: What questions to ask a seller?
If I, as an investor, were thinking of buying a house, here are the questions I would ask the seller. I don’t ask this many questions, but this covers most of them.
VALUE INFO:
What would this property be worth in good market condition?
What is the neighborhood comp range?
Does this house have an appraisal?
How much did it appraise for?
Is this a refi appraisal?
When did it appraise for that amount?
What is the current tax value?
What is the last sold price?
When did it last sell for that amount?
LOAN, LIENS AND PAYMENT INFO:
How much is owing on the 1st mortgage?
Who is the lender on the 1st mortgage?
What type of loan program on the 1st?
When will this loan payment adjust on the 1st?
How much is owing on the 2nd mortgage?
Who is the lender on the 2nd mortgage?
What type of loan program for the 2nd?
When will this loan payment adjust on the 2nd?
What do you owe on the water bill?
Do you have any past due property taxes due?
Do you have a pre-payment penalty?
Any unpaid or levied assessments?
Are there any personal judgments attached to the property?
Are there any tax liens attached to the property?
Are there any mechanics liens on the property?
Have any contractors done work on the property in the last few months?
Were the contractors and subcontractors paid in full?
What other liens are owing and how much?
Total Monthly Payment with principle, interest, taxes and insurance?
Are taxes escrowed into the payment?
Is Insurance escrowed into the payment?
Is PMI escrowed into the payment?
How much is insurance per month?
How much are property taxes per year?
How much is your principle and interest payment every month?
How much is your PMI payment monthly?
What is your current escrow balance with your lender?
How much is the monthly association?
How many mortgage payments are you behind?
How much money are you past due?
Are you in foreclosure?
How many vacant houses does the seller own?
Has the seller recently filed Chapter 7 or 13 bankruptcies?
When does the seller want to vacate the property?
How much money to reinstate the loan?
Has the bank offered a discount on the 1st mortgage and what would they take $________
Do you have a loss mitigator contact name and number for the 1st mortgage?
Has the bank offered a discount on the 2nd mortgage and what would they take $________
Do you have a loss mitigator contact name and number for the 2nd mortgage?
When is the sheriff’s sale date?
Will you sell for what you owe?
CREATIVE FINANCING INFO:
Will you deed over the property to me “subject to”?
If you must have some equity, how much cash today to walk away from your equity?
Instead of cash today can we keep your equity a 2nd lien which is paid as a lump sum to you when I sell?
If you must have interest on that equity, how low of an interest rate?
How many max years could you wait to have your note balloon and cash out?
How many payments will you make before I have to make the first payment
How much per month will you contribute and subsidize of the payment?
How many months will you subsidize that payment amount for?
CURRENT RENTER INFO
Is the property vacant or is a renter living there right now?
Is the renter current on their rent?
When does the renter’s lease end?
How much does the property cashflow every month with taxes and insurance factored in?
What is the property rented for currently?
What is the market value rent for this property?
Is there a rent to own buyer in the property right now?
Does a tenant need to be evicted from the property?
How much in security deposits and/or option money will transfer to me when you sell?
If you won’t deed me your house and sell subject to, will you sell on a contract for deed?
CONTRACT FOR DEED INFO
What price would you want on a contract for deed?
How little down would I have to pay you on a contract for deed?
What payment would you want on a contract for deed?
What is the lowest interest rate you would accept on a contract for deed?
How many years would we ammortize that payment amount over?
How long of a balloon until you get cashed out on the contract for deed?
If you won’t sell on a subject to, or contract for deed, would you sell on a lease option?
LEASE OPTION SALE INFO
What price would you sell on a lease option?
How long would you lock that price in for on a lease option?
What monthly payment would you want on a lease option?
How much rent credit per month would you give me on a lease option?
Would I get a discount if I purchased the property before the locked price expires?
How much of a discount would I get on the lease option if I purchased earlier?
MLS INFO
Is the property on the MLS right now?MLS#
Is it an expired MLS listing?
How long ago did it expire?
What price did it expire at?
OTHER SIGNATURES REQUIRED INFO
Does anyone else right now have this property under contract?
Do you need to cancel another purchase agreement?
Are you getting divorced, meaning both spouses need to sign?
Is this property in Probate?
LOT AND LOCATION INFO
Is this property near a railroad track?
Is this property facing a busy street?
Is the property on a corner lot?
Is the property on a cul-de-sac?
Is the house near a golf course?
Is it on a wooded lot?
Does the house have a fenced in yard?
Does the property have a pond view?
Does the property have a river view?
Does the property have river front?
Does the property have a lake view?
Does the property have lake front?
Is the house on a creek?
What is the lot size?
Is this on a double sized lot?
How many acres does the property have?
Is the land subdividable?
OTHER FEE INFO
Do any assignment fees need to be paid?
Who do we owe assignment fees to?
How much is the assignment fee?
REHABBER INFO
Is the electric still turned on?
How many estimated dollars in work does this property need?
How many unfinished sq ft can be finished?
How many egress windows and bedrooms can be added to the existing property?
Do all bedrooms have egress windows?
Do all bedrooms have closets?
Do you have any non conforming bedrooms?
Does the house have junk that needs to be removed?
Is the driveway completed?
Is it an asphalt or concrete driveway?
Does the driveway need a new coat or repair for cracks?
Is the sod laid and completed?
Is there any stump or tree removal needed?
When will the current construction be completed?
Does the property have an unfinished basement?
How high is the ceiling height in the basement?
Are there any roughed in bathrooms?
Are their any framed in bedrooms?
Is the foundation slanted or sloped?
Are the floors slanted or sloped?
Does the property have any water damage or frozen pipes?
Does the property have any fire damage?
Is there anything that needs to be done according to Truth in Housing Inspection?
Does the property have R & R’s that need to be completed?
Is the property boarded up?
Is the property condemned?
What appliances would I need to buy, fix, or replace?
Can I finish sq ft in the attic?
Can I add a bathroom?
Does the boiler need to be replaced?
Does the house need any cabinets?
How much new carpet does the house need?
Does the outside need concrete work done?
Does it need a deck or deck repair?
Does the property need new doors?
Does the property need new drywall installed?
Does the property have holes in the drywall?
Does the property need electric work done?
How old is the roof?
How many layers of shingles on the roof?
Does the property need a new roof?
Does the property need facia work done?
Does the property need soffit work done?
Does the property need new flooring?
Does the property need furnace replacement?
Does the garage door need to be fixed or replaced?
Does the property need HVAC replaced?
Does the kitchen need to be updated?
Do you need a new kitchen countertop?
Could the outside yard use landscaping?
Does this property have mold damage?
Does the property need paint?
Does the property need plumbing work done?
Is the porch in need of repair?
Does the property need new siding?
Does the property need stairs installed?
Does the property have a stucco problem?
Does the property need some new windows?
Do the ceilings need repair or new paint?
Do the screens need to be replaced?
Do the windows need trim and sill?
Does it need new light fixtures?
Does it need any new sinks?
Does it need new toilets?
Does it need a new shower?
Does it need a new tub?
Does it need a new medicine cabinet?
Do the hardwood floors need to be replaced or refinished?
Does the garbage disposal work?
Does the garage door opener work?
Does the chimney need repair?
Does the property need gutters?
Does the property need ventilation?
Does the property need insulation?
Does the property need a sump pump?
Does the water heater need to be replaced?
Does this property have old wood paneling that needs to be replaced?
Does the property need a new built in microwave?
Does the property need a new hood vent?
Would someone need to buy, fix or replace the range?
Would someone need to buy, fix or replace the dishwasher?
Would someone need to buy, fix or replace the refrigerator?
Would someone need to buy, fix or replace the washer?
Would someone need to buy, fix or replace the dryer?
Would someone need to buy, fix or replace the water softner, or is it rented?
PROPERTY INFO:
What is the address?
What is the city?
How many legal bedrooms?
How many bathrooms?
How many above ground finished square feet?
How many below ground finished square feet?
What is the Foundation size?
What is the house style?
How many garage stalls?
Attached garage or detached?
What year was the house built?
Exterior Type?
Does the property have a basement?
Is the basement a walkout or lookout?
Which appliances stay with the house?
Which electronics stay with the house?
Does the house have A/C?
What kind of heating does the property have?
Does the property have hardwood floors?
Does the property have pergo floors?
How many fireplaces does the property have?
Does the house have city water?
Does the house have a septic system?
Does the house have well water?
Photos available of the property?
How many days has it been on the market?
MULTI-FAMILY INFO:
How many conforming units?
How many non conforming units?
How many off street parking spots?
How many garage stalls?
What roof type does building have?
Does the property have coin-op?
Are the utilities seperated by unit?
What is the annual gross rent?
What is the other income?
What is the annual net income?
What are the annual Insurance expenses?
What are the annual taxes?
What is the annual electric expenses?
What is the annual repair expenses?
What is the annual fuel expenses?
What is the annual trash expenses?
What is the annual water/sewer expenses?
What is the annual maintenance expesnes?
What is the annual on site caretaker expesnes?
What is the annual snow removal expenses?
What is the annual lawn mowing expenses?
What is the annual utility expenses for the landlord?
What is the annual utility expenses for the renters?
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